Qi Lu: IAB MIXX Conference Keynote

QI LU: Thank you so much. Thank you very much for the opportunity to speak to you this morning. I would like to share Microsoft’s point of view about the advertising industry, and why we’re very excited about the upcoming changes of the ushering into a new era of digital experiences whereby digital advertising can be reimagined from the ground up, and what we are focusing on at Microsoft to move into that new era.

To start with I want to first speak to you about the center of the driving force that’s shaping up that new era, because what we are witnessing is unfolding of an era of vertically integrated ecosystems whereby devices are fully integrated with services and deliver potent consumer experiences that enable a lot of innovations to happen.

To start with let’s talk about Apple. They certainly are the pioneers of ushering into that new era. If you look back say about 10, 11 years ago when iPod was launched, as we all remember, iPod was a music device, but the way it was able to break through among other devices is fully integrated with iTunes.

Then 2007 with the iPhone, although the touch interaction is a new thing, but the most important fact that propelled the iPhone to be a successful product is because for the first time the Web browser works, the services that’s encapsulating the Web, all the different websites finally can deliver potent new experience values on a mobile handset.

Then you have iPad and other devices, but each time Apple ships a new device it’s always integrated with a set of strong services. We have iOS 5 and iCloud, new thin iBook, certainly iOS 6 and Passbook, Siri; represents a new generation of intelligent services that will unfold for many years to come.

Certainly Google is another emerging very powerful stack of devices fully integrated with services. They move from a search heritage, but now with the acquisition of Motorola the Google stack has become extremely competitive with all the new services: Google Play, YouTube, Google+, Google Now, all those emerging services.

And out of them came out of nowhere all of a sudden they become a strong player, because they take full advantage of their services, particularly the media book services, the Kindle devices, out of box the books, the video consumption experiences are very, very competitive.

And, of course, Microsoft, we believe we have the strongest suite of products and services from both the device and the service side, and in particular we have a very, very large market footprint of 1.2 billion devices deployed worldwide, and we have the technological capabilities to take the innovation going forward. I will speak a lot more about this.

But to summarize, the future digital lay of the land is going to largely shift by these vertically integrated devices and services, and, of course, there will be always strong horizontal companies building very successful businesses, such as Facebook, but the profound reason why the new digital lay of the land will be driven largely by those vertically integrated devices and services is because the innovations that are happening across seams, across the boundary between hardware to OS to cloud delivering the services are unlocking substantial new values, substantial consumer experiences and opportunities for innovation. That’s the most important part.

And one of the most important sources of innovation that’s behind the type of new experiences that we can build is a large fundamental undercurrent, which you all know that’s unfolding for the last couple of decades and continues further, and that’s the digitization of our entire society, because we are digitizing almost every aspect of what we do. We are building collectively as an industry, building digital systems, to start with in the early ’90s of the Internet and the World Wide Web, and as we all know search emerged from an initial consumer application to become the gateway to the Web of documents because the Web is so large you have to have extremely potent technological capabilities to enable people to discover and navigate.

But now the Web has far, way, way, way outgrow its intellectual heritage of a corpus of documents, it becomes a Web of the world. We’re no longer dealing with documents, we’re dealing with digital entities. People, places, things, and their relationships are all being digitally represented, and search as a gateway is also being reinvented and we at Bing aspire to be the leader of new search, a new era of search that builds different relationships with users, not only connecting them to information but enable them to take action, to enable them to accomplish their goals and purposes much easier and faster.

But underneath there is a set of very, very important governing information structures that will fundamentally shape how future digital interactions, digital experiences will be developed. Let me talk through a couple of key things.

First is the topical structures of all the information that we digitally interact with, because the World Wide Web is really the digitization of human thoughts and human discourse, and fundamental information architecture is a topical structure. That’s how human language is being deployed, anytime we write down information, interact with each other, have discussions, and that’s important structures and still growing at a rapid pace. There are tens of trillions of documents being digitally captured, and each single day we create and discover billions of new documents.

And second is the social architecture. What Facebook has done is profound, because the human relationships are now being fully digitally represented, and they’ve become a new emerging information architecture anytime users are sharing information, and those information architectures become another emerging structure that govern how the future digital interactions are being interactive and consumed.

The third one that’s unfolding at an early stage is the geospatial dimension of all the information, because we as industries are collectively digitizing our planet. Every physical location, every road, every building will all have full digital representation, because we, human beings living in a physical world, we connect to services, products, other human beings in a spatial manner. And that’s extremely part of digital, future digital experience.

What happened to Apple, the Mac product, the fact that Tim Cook even issued an apology speaks to the fundamental importance of the geospatial dimension of the digital experiences, and we’re actually very happy that Tim when he published his blog post he recommend some other mapping services, and that Bing was being recommended as one of the choices, because we at Microsoft have been investing very heavily on building a future generation of geospatial experiences. For example, we custom designed our own cameras, fly them on aircraft and satellites, so we can build the full digital model, the new namespaces, so these can be all available on future devices.

And the first one at the early stage is equally very, very important, which is the applification of the digital Web, because the browser is far too limiting, it’s not powerful enough to unlock all the values. Our industry collectively invented a set of app models so that the future interactions are all encapsulated in app interactions.

Now, the information architecture for apps are being at the early stage being constructed by the different ecosystems. Fundamentally, they’re about entities and relationships so that over time all the apps can be connected together, and provide very, very compelling experiences.

So, those are the fundamental information architecture that will govern future human digital interactions. And certainly as we think about the future of advertising experiences, they are a very, very important part of the consideration.

At the end, the fundamental driving force behind all those are technology, and there is another very, very important micro trend at the early stage I’d like to speak to you about, which is the dawn of a new era what we call the NUI, natural human interactions, because the devices and services and the computation that’s being orchestrated between the devices and the cloud-developed services is going to interact, enable users to interact with those devices in very natural manners, and the device will have the intelligence to understand human beings’ purposes.

On the device side we have all the computation that over time will fundamentally understand human language, written language in the form of text, spoken language in the form of voice, body language in the form of gesture. And with device computation can also have the ability to perceive, understand images, motion, all the sensors, fully aware of the context, where you are, are you moving, moving at driving speed or walking speed. All those are digitally available and captured as part of devices.

On the server side, on the cloud side you have a cloud infrastructure that encapsulates all the digital observances in the era of big data. There’s a lot of buzz about big data. The whole essence of big data is the machine-learning technologies, because machine learning as a regime of computations, enables to etiologically, cheaply capture and saving stable patterns that human can tell the difference. Anything that human can tell a difference, that’s set and stable, turns out they’re all machine learnable. What happens is it’s so cheap to capture digital observances so that we can model pretty much everything we do.

So, that’s what we called the intelligence fabric. Anything we do, anywhere we are, the device, the cloud services, we have the model that understands the situation and have the ability to predict, anticipate. That’s the hallmark of human intelligence.

So, adding all those together we are in the early stages of devices that increasingly are intelligent, that can interact with humans in a very, very natural way, the Microsoft Kinect, Apple’s Siri, the recent Google Now experiences are all at the very early stage of bringing our experiences into that era, and we can imagine how powerful those experiences can be in the future.

So, all those leading to what at Microsoft is a new opportunity, which is the upcoming launch of Windows 8. Windows 8 not only represents the new generation of Microsoft computing platforms, it also represents a new era of our company, because we will work very differently to bring all of Microsoft’s assets into the platform so that it becomes the baseline to unlock a lot of human creativities, building rich digital experiences. In particular we’re focusing on a design language we call the modern UI design language that’s fully immersive, that’s consistent across devices, so that if you’re publishers, if you’re media executives you’ll have the opportunity to bring compelling experiences at scale, reach your audiences empowered that’s never been there before.

So, these are the opportunities across devices, across different form factors, and unlocking a lot of consumer values, and specifically we’re using the Windows 8 platform to reimagine the digital surface area. Anytime you bring a device, whether it’s a tablet, a PC, or TV, the surface will be reimagined.

There’s a set of experiences out of box, just works. For example, news, sports, all those experiences needs to come out of box right there and work for the users. And some of those experiences are naturally ad-funded. That’s why advertising as a business is of fundamental importance to us at Microsoft as we drive the Windows platform for the future.

At the same time, we are also reimagining, reinventing the digital experiences that are underneath the surfaces. Every app, every interaction are fully being reimagined. Search is going to be different. How search works in a voice, gesture environment, the portal is going to be different. Music, movie, video, everything will be different. And in particular I will talk a little bit about MSN, because MSN is one of the largest portals, have more than — reaching more than 480 million unique users on a monthly basis, and we at Microsoft completely reimagined the future portal experience from the ground up, taking full advantage of the power the Windows 8 platform delivers.

So, to give you an early preview let’s welcome Bob Visse to give us a demo. (Applause.)

BOB VISSE: Thank you. It’s really a pleasure to be here today. Today, we’re unveiling for the very first time in public the new MSN for Windows 8. So, I’m going to take you through a demo of that. I’m also going to show you some other important experiences that Qi talked about in terms of what we’re doing with our Bing apps and some exciting new advertising opportunities that we have with Windows 8 as well.

So, let me first jump in. This is my Windows 8 desktop, and as many of you know, MSN is the default homepage for most of the Windows machines that we’ll be shipping this fall on October 26th. This experience will go public on October 26th. The experience is exclusively for Windows 8 on IE10, and it’s meant to be a touch-based very fast experience.

So, I’m first going to click in. So, this is what the new MSN looks like, completely touch-enabled, a beautiful experience in the modern UI. It’s really beautiful. You can see here everything I’m doing is touch-enabled as I go through the info pane.

For the first time, we’ll be launching our own news experience, MSN News. This is a quick example of what that looks like. Again, beautiful here, all the images are touch-enabled. I can go into any of the different departments, all the way through to articles; a very beautiful experience.

Sports, fully integrated. You can see the UI is completely integrated, always keeping that new modern user interface throughout the experience, providing opportunities for advertisers throughout the experience to really pop with this.

We’ve taken advantage of some very unique features inside of the experience as well. Up here I’m going to go into entertainment. I’m trying to go into entertainment.

The dangers of doing live site, ladies and gentlemen. I’ve lost my connection. Well, luckily I have a packet. I’m going to move over to the backup machine. Sorry, our Internet connection seems to have gone off.

So, I’m going to go into another section here. So, I’ll go into autos here, and I wanted to show some of the things that we can do, the amount of speed that we have in some of the new features here.

So, one of the things that we’ve done is we’ve taken advantage of a couple of new features that are exclusive to Windows 8 and IE10. One example of that is a new feature that we call Flip Ahead. So, you can see here I can just very naturally flip ahead through pages that are on the site. So, I can go and look at an article. I can flip through, go to the next page, look at that article again, go down and flip through the page again.

Now, here is an example where we’ve really done a lot of work to take advantage of the power of Windows 8 and IE10. So, in this particular example we’ve used hardware acceleration so that we can quickly get through the pages. If I can quickly get through these pages here, and you can see here I can have incredibly good speed because we’ve actually used the IE10 hardware acceleration throughout the site.

Now, I’m going to show one other really cool feature that we have in MSN Money. So, this particular feature here is, again, exclusive to Windows 8 and IE10, and this is a feature that’s called Snap. So, I can go ahead and snap this site onto to the side, and while I do that, so let’s say I’m doing work and I want to be able to have the site up, and maybe I’m tracking a stock, I can have that stock and up and track that as I’m also working on PowerPoint at the same time. So, I can watch a video, I can be keeping track of the marketplace, and I can actually drive the entire MSN site from this spot.

So, that’s just a quick look at MSN 8  I’m sorry, MSN for Windows 8, and that will be available, again, publicly on October 26th.

Now I’m going to go into some of the new Bing experiences. So, this is a new Bing Search app, and this is a really excellent experience where I can actually go in and take advantage of the broad corpus of the Web. So, here I’m doing a search on Times Square in a Bing app. Again, I can use the Windows 8 Snap-To feature here. I can go in and actually use this new UI to pop new pages and drive the experience through the Snap view.

I can go in and I can take a look at the different images that we have in the Bing corpus. From there, I can go and I can actually scroll through. It’s a whole entirely new way to use search through the Bing app.

Here you can see we have these beautiful images from Bing. I can actually scroll through these images. You can take a look at the images in a new, totally natural UI, a new interface.

So, that’s a quick look at the new Bing app for Windows 8.

The next thing I’m going to show is news. So, we have a new news experience, Bing News, that is shipping with Windows 8. And this experience, you can see, again, a beautiful hero image comes as we first load the page. I can go in and look at an article here, and load that article. And you can see I can scroll through the article and read it.

And then what we have here is beautiful advertisements that show up that are not interruptive to the user experience, but give a place where the advertisers can really break through with that experience.

With this app, I can choose to customize this app. So I have here I’ve customized this particular app for things that I might be interested in today, so that IAB MIXX, my Seattle Seahawks, and so forth. I also have the ability to go and pick from multiple sources across the app. So, it gives you an idea of what the new news experience is like. It’s really a beautiful experience all the way through, very rich.

Next, I’m going to show the Bing Travel app, again another app where we’re really taking advantage of that broad corpus that Qi was talking about before with search, and doing search in a new and a totally innovative way. So, here we’re taking basically advantage of the Bing corpus to bring in all of this sort of new data around travel. So, as I scroll through here, you can see different images that we have, magazine articles, and so on and so forth. We have some really rich things in here.

So, if I go into, for example, let’s take a look at New York. I can go in here. It doesn’t matter whether it’s weather, or whether it’s booking a travel arrangement, checking your flights, all of this is structured data that we have out on the Web. You can see here I can actually go in and look at panorama of Times Square right from this Bing News app, just absolutely beautiful imagery throughout that experience.

If I go back here, go back to the home page here, I can actually go into another advertising experience that’s really a beautiful experience that we’ve built with the SDK that we have for Windows 8. This particular advertisement is an advertisement by Cadillac, a really beautiful ad, and a beautiful implementation. So, I’m going to go into this Patagonia section, very relevant to someone who is interested in travel. I can in-line play a video.

(Video segment.)

I won’t watch the whole video, but a beautiful way of integrating an advertising experience into an overall travel application is the example there. I can take that back to the home, and you can see I can go ahead and easily just get out of the application. A little tip, that’s how you get out of the Windows 8 applications is drag them down.

This last application that I’m going to show you is actually a partnership that we’ve done with our local soccer club, the Seattle Sounders, but in this particular example this is an example of where a third party can go out and publish a beautiful application about their particular content, and take advantage of the underlying technologies that we have with Windows 8 and the SDK that we have to build great advertising experiences.

So, here you can see, as I roll over this site, you can actually see the layering there of one of the products that we’ll be showing and advertising on. Here is an area where you can engage with advertisers in a non-interruptive way. If I decide, hey, I want to look at this, and maybe get a haircut, I can go and look at the different promotions that are available from that advertiser, and I can close that up.

You can see here as I scroll across this site, there’s a lot of interactivity here. I can go into another advertisement here where I can actually explore the product, in this case some soccer cleats. I can go in and I can look at the different views of the cleats. I can get a completely sort of close-up view of that; really a beautiful experience all the way through.

So, that gives you an idea of what we’re doing with MSN, specifically for Windows 8, and what we’re doing across several different applications in advertising for the new Windows 8 product. I hope you enjoyed it. Thank you. (Applause.)

QI LU: Thanks, Bob.

I will finish by talking about our shared future together. As you have seen, we have the opportunity to reimagine digital experiences, particularly digital advertising experiences. And our fundamental focus, our fundamental focus is to get the consumer experience right, because up to this point the online medium has not met the promise of becoming a medium we can build the brand successfully. Part of this experience is just not there.

Now we have the opportunity to bring that into a new era, and that’s the biggest focus we all do at Microsoft, from the publishers side, from the advertising side, it’s fundamentally focusing on getting the advertising experience right. And we cannot do that alone and we had to do that with partnership, with many other players in the ecosystem.

Fundamentally we’re going to focus on building tools and solutions. In the engineering teams we’re always focusing on three key dimensions of measurability, target-ability, and predictability. And those, particularly in terms of measurability, because any time we bring more measurability to a medium, the medium will unlock substantial new values.

Last, definitely not least, is partnership. Microsoft as a company has a heritage of building ecosystems and partnering with all parties inside this ecosystem. And you all represent our industry’s brightest minds and best innovators. And we certainly are very much looking forward to working with you all to build a bright, bright future for a new digital era of advertising. Thank you very much. (Applause.)